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streetwise B Y S T E P H E N B A R L A S , K A R E N L .

J E T T, K A T H Y W I L L I A M S

[NEWS]

Supply Chain Risks: Are KEITH RUSSELL,


You Prepared? | K A T H Y W I L L I A M S 1946–2008
Companies are faced with a growing number of supply chain risks almost Keith Russell, CMA, dean of the Bill Greehey
daily, but most aren’t prepared to deal with them, a recent study of North School of Business at St. Mary’s University
American risk managers found. Although 73% of the respondents said their in San Antonio, Texas, and former member of
supply chain risk level had increased since 2005, none of the respondents the IMA Executive Committee, died April 9,
reported that their company was highly effective at managing such risks, 2008, at the age of 61.
and only 35% said their company was moderately effective at doing so. Also, He had been at the University since Janu-
65% said the risk management programs they had in place had “low” or ary 2005 and had already made a great
“unknown” effectiveness or said they didn’t even have a formal program. All impact, the school said. He had raised the
this was despite the fact that 71% reported that the financial impact of sup- standards in the business school through
ply chain disruptions—such as hurricanes, floods, labor issues, raw material the introduction of
costs, shifting production to one plant or another, and a variety of others— the Greehey
is damaging bottom lines, customer retention, and brand equity. Scholars Program
These are some of the findings of a survey of 110 North American risk and the one-year
managers conducted by Marsh, Inc., in conjunction with Risk & Insurance MBA program, had
led it through the
magazine. Participating organizations were primarily in the manufacturing,
AACSB reaccredi-
distribution, and retail businesses, as well as some government entities.
tation process,
Fifty-one percent of the respondents were from large enterprises ($1 billion
and was involved
or more in annual revenue), 30% were from midsize enterprises ($50 mil-
in the creation of
lion–$999 million), and 19% were from small businesses (less than $50 mil-
the Bill Greehey
lion). Supply chain is defined as including all processes involved in making,
School of Busi-
moving, storing, or servicing physical goods across the end-to-end supply
ness trading room
chain from raw material producers through to the end customer. Activities
and its attendant student-managed portfolio
include internal processes—such as manufacturing, purchasing, warehous- investment course. An advocate of interna-
ing, transportation, and inventory management—as well as external activi- tionalization at the business school, he cre-
IMAGE COURTESY OF ST. MARY’S UNIVERSITY

ties by suppliers, logistics partners, distributors, service organizations, and ated initiatives that led to cooperative
others. exchange agreements with universities in
Survey respondents said the greatest risks are pricing risks; risks and Germany, China, and Taiwan, and he intro-
delays with suppliers; risks with their own plants, warehouses, and stores; duced a certification program for Mongolian
logistics delays and disruptions; and natural disasters. Although these risks business executives.
have always been present, they are being exacerbated by the move to leaner Before going to St. Mary’s, Keith had been
supply chains holding less inventory and the move to increased outsourc- with Southeast Missouri State University
ing, according to the survey report. Yet even though 75% of the respondents
continued on next page
said these risks are among their top 10 issues to continued on page 61

May 2008 | S T R AT E G I C F I N A N C E 23
[NEWS] c o n t ’d f r o m p . 2 3
address, they are a top-three priority
for only 20%.
How can companies improve their
supply chain risk management? The
report offers several suggestions,
including:
● Create a cross-functional sup-
ply chain risk team that looks end-
to-end. Charge them with looking at
insurable and uninsurable supply
chain risks; increase the scope of risk
assessments across the external sup-
ply chain; maintain senior manage-
ment support through risk reports
and other means; and hold regular
conversations about risk.
● Embed risk management activi-
ties and responsibilities into existing
supply chain processes and func-
tions, and create consistency across
the organization. For example, create
a center of risk excellence that can
provide the templates, methods, and
tools for all employees involved in
the process to use, the report advises.
Without these templates, each busi-
ness unit or function will probably
do what it wants to do, and there will
be little coordination. Also, review
processes and policies annually, and
include risk management in supply
chain managers’ job descriptions.
● Build up analytics and risk
metrics.
● Extend the role of the risk
manager so they will be a key advi-
sor for strategic supply chain deci-
sions and can find better ways to
spot and mitigate risks.
These are just some of the findings
from the in-depth report. For a copy
of the report, titled Stemming the Ris-
ing Tide of Supply Chain Risks: How
Risk Managers’ Roles and Responsibil-
ities Are Changing, visit http://glob-
al.marsh.com. Click on News and
then Businesses See Supply Chain
Risks Rising, Study Finds. ■
May 2008 | S T R AT E G I C F I N A N C E 61

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